March 31, 2011

Russia's grain output to recover

Russia's grain production is predicted to recover to around 84 million tonnes this year, and the government may allow up to 5.5 million tonnes of exports, USDA said.

In a report published on Tuesday (Mar 29), USDA's Moscow attache said that this year, better yields are expected to boost output, after the country's worst drought slashed the harvest to 61 million tonnes last year.

Wheat production is expected to rise by 27% to 52.5 million tonnes due to better output from key producing regions, which includes the Southern Federal District and West Siberia. The barley crop is forecast to double to approximately 16 million tonnes.

"Russia's average yields for most crops will not exceed their five to seven year averages, but some provinces (such as the European South) will be much better than others," said USDA.

Exports are predicted to rise to 5.5 million tonnes, up one million tonnes on last year, as ending stocks rise by a third to nine million tonnes compared with six million tonnes at the beginning of the 2011 marketing year.

Domestic food and industrial consumption is also expected to rise by 1.5 million tonnes to 34 million tonnes and domestic feed consumption is expected to rise from last year's five-year low of 33 million tonnes to 41.5 million tonnes.

Better production is likely to improve prospects for the long-term development of Russia's agricultural sector by helping the country's debt-ridden farmers boost investments, USDA said. "Practically all farmers have significant outstanding debts inherited from 2007-2009, when they were increasing investments in agricultural production," said USDA. "Given the increased grain prices in marketing year 2010, the returns of farmers in some provinces might increase; and those farmers may increase investments in grain production."